| The Federal Reserve System - also called the Federal | | | | response to a general sense of anger and frustration |
| Reserve or the Fed - is the central banking system of | | | | among consumers over what some believe are unfair |
| the United States. It has a number of unique powers | | | | or even predatory overdraft fee policies instituted by |
| and abilities, including being the only governmental body | | | | most major banks. |
| to print and distribute U.S. paper currency into | | | | What the New Rule Requires |
| circulation. | | | | Officially called Regulation E: Electronic Fund Transfers, |
| Originally founded in 1910 as a way to provide a | | | | the new Fed rule sets forth the following requirements |
| system of checks and balances in the financial system | | | | of banks: |
| and to prevent runs on banks, its roles and | | | | 1. Requires that new bank customers be given the |
| responsibilities have evolved over the years. In its | | | | opportunity to opt-in (actively elect) to overdraft |
| current form, the Fed has the ability to influence | | | | protection programs that allow ATM withdrawals and |
| monetary and credit conditions, regulate banking | | | | debit charges to be made, even when the account is |
| institutions, and provide financial services to depository | | | | at a zero balance. (Previously, most programs had |
| institutions. | | | | been opt-out). |
| As an institution that has the ability to regulate banks, | | | | 2. The final rule prohibits banks from discriminating |
| the Fed has been paying attention to legislative and | | | | against customers who do not opt in to an overdraft |
| consumer demands regarding banks' overdraft fee | | | | protection program. |
| policies. In this capacity, many people have been | | | | 3. Consumer who do not opt in will still be guaranteed |
| wondering about the new law on overdraft bank fees. | | | | access to the same account terms, conditions, |
| In reality, it is technically a new rule rather than a new | | | | features and pricing as customers who do opt in. |
| law. But, in every other way it is just as binding as a | | | | Of course, even with the new rule in place, banks will |
| law, since banks are required to comply to the | | | | still continue to make billions of dollars per year in |
| regulations set out by the Fed. | | | | overdraft fees off of consumers. The only solution for |
| A Response to Rising Anger about Overdraft Fees | | | | customers to avoid these fees altogether is to switch |
| The new rule was announced on November 12, 2009, | | | | to banks that do not charge overdraft fees - even if |
| but it goes into effect on July 1, 2010. It was created in | | | | an account is overdrawn. |